Life insurance or pension?

Legacy_user

I was reading that the unused portion of a pension pot can be passed down, with the tax status depending on age of death (taxable after 75)

Is it better to just put more into the pension rather than have a life insurance policy? My instincts say that life insurance only makes sense for an early death, I.e. freak road accident or lightning strike, etc - so its about risk as well

I don't feel like I could afford a life insurance policy that would sufficiently protect my family, it'd be a financial disaster if either of us died while we rely on each other for childcare and work, so i feel I may have no choice but to risk it. If I did die, then my partner could claim benefits I suppose, and that's a sort of insurance anyway? My income isn't much above what benefits would give

Also get extra tax credits for pension contributions so it seems like a good way to build it up, and generate more long term protection than I otherwise could

System

There's a chance I'll need an operation in a few years, odds are good but not perfect, but insurance could be more expensive...

Kynthia

You need a pension and life assurance, one to live on when you retire and one to provide for your dependants should you die before then. You can have life assurance just until you are 60 or earlier if your dependants won't have some a financial need should you die.

How much life assurance do you think you need and how much do you think it would cost? Usually it's a relatively affordable product.

System

If there was a no questions asked policy I'd consider taking one out with sufficient time before my operation...

System

I'd need about 4 years of £12000 a year to tide my partner over till she could work full time, but it may reduce her available benefits to receive it, and it may be more expensive with Marfan's syndrome

I was wondering if longer term a pension would give her a better death pot

dunstonh

I was reading that the unused portion of a pension pot can be passed down, with the tax status depending on age of death (taxable after 75)

depends on the type of pension and the options purchased or available on the product you bought.

Is it better to just put more into the pension rather than have a life insurance policy? My instincts say that life insurance only makes sense for an early death, I.e. freak road accident or lightning strike, etc - so its about risk as well

You take out life assurance to cover a financial need. If there is no financial need, then you dont take out life assurance.

I don't feel like I could afford a life insurance policy that would sufficiently protect my family, it'd be a financial disaster if either of us died while we rely on each other for childcare and work, so i feel I may have no choice but to risk it. If I did die, then my partner could claim benefits I suppose, and that's a sort of insurance anyway? My income isn't much above what benefits would give

There is a 20% chance you will die before retirement. Life assurance is cheap. So, why don't you think you can afford it?
Benefits will not make up anywhere near the shortfall.

It should not be a choice between pension and life assurance. Its like asking whether you should pay the gas bill or the electric bill.

If there was a no questions asked policy I'd consider taking one out with sufficient time before my operation...

They exist but they are an option of last resort and typically poor value for money.

System

Ahhh so if I build up a sipp sufficiently there's enough death benefit essentially and then I don't have to worry and would then be free to just hammer more into the sipp

But maybe have the insurance until that time, or to hedge against death when its more likely

I reckon as a long term investment its unprofitable for me, so its about covering short term need I suppose

System

4 years cover should get me to the point where I'm more of a bonus than a necessity